TaxProf Blog

Editor: Paul L. Caron
Pepperdine University School of Law

A Member of the Law Professor Blogs Network

Tuesday, December 5, 2006

California Tax Authorities Defy Legislature and Revive ReadyReturn Program; Joe Bankman Spends $30k to Help, Putting Kitchen Remodel on Hold

Ready_return_1Interesting article in today's L.A. Times about how California's tax authorities have resurrected the ReadyReturn pilot program in defiance of the state legislature:  Defying Legislators, Officials Revive Tax Return Program; Officials Expand ReadyReturn, in Which Government Calculates What Taxpayers Owe; The Legislature, Lobbied by Intuit, Had Let It Die, by Evan Halper:

State tax authorities defied lawmakers Monday by reviving ReadyReturn, a program that allows some taxpayers to have the state do their returns for them, and expanding it from a tiny pilot project to a service for 1 million Californians. The move was engineered by outgoing Controller Steve Westly and his successor, John Chiang, both champions of the program. Intuit, the Silicon Valley manufacturer of TurboTax, spent $1 million trying to defeat Chiang on Nov. 7 and stop the program.

ReadyReturn is designed to ease the burden of filers with the simplest returns: single taxpayers with one employer and no complicated deductions. Despite rave reviews by most of the 11,000 taxpayers who used it last year, the Legislature over the summer yielded to an intense lobbying campaign by Intuit and let the program die.

But Chiang, Westly and Department of Finance Director Mike Genest, who make up the state's Franchise Tax Board, made the move after receiving legal opinions from legislative and tax board staff suggesting that they have the authority to implement the program on their own. Chiang has a seat on the tax board by virtue of his leadership of another tax panel, the state Board of Equalization....

Stanford University law professor Joseph Bankman, who worked with the tax board to create the program, grew so discouraged when Intuit's lobbyists were able to derail it in the Legislature that Bankman hired a lobbyist of his own to try bring it back to life. He used the $30,000 his family had set aside for a kitchen remodeling to pay the bill. After Monday's vote, Bankman said: "I'm thrilled."

Kudos to Joe for putting his money where his mouth is.  (By the way, is there any way Joe can deduct the $30k?)

http://taxprof.typepad.com/taxprof_blog/2006/12/california_tax_.html

News | Permalink

TrackBack URL for this entry:

http://www.typepad.com/services/trackback/6a00d8341c4eab53ef00d83501544569e2

Listed below are links to weblogs that reference California Tax Authorities Defy Legislature and Revive ReadyReturn Program; Joe Bankman Spends $30k to Help, Putting Kitchen Remodel on Hold:

Comments

"Bankman hired a lobbyist of his own to try bring it back to life. He used the 30,000 his family had set aside for a kitchen remodeling to pay the bill."

Hmm, maybe the legislature will earmark a new granite countertop for Mr. Bankman as part of its next spending bill?

In all seriousness, that's a terrific gesture.

Posted by: andy | Dec 5, 2006 5:23:44 PM

Assuming that Bankman will derive taxable consulting fees, it seems like he ought to get a deduction under §212 or §162. Of course, the necessary predicate is that the expenses must business and not personal.

Sounds like a nice research project for next semester's Intro Tax class and hats off to Joe.

Posted by: Darryl | Dec 6, 2006 11:06:56 AM

Assuming that Bankman anticipates taxable income in the form of consulting fees, he ought to be able to deduct these expenses under §212 or §162. The necessary predicate, of course, is that the payment was of a business and not a personal nature.

Posted by: Darryl | Dec 6, 2006 11:11:10 AM